Miners speak on forex retention

Ishemunyoro Chingwere Business Reporter
Small-scale miners, who account for more than 60 percent of gold deliveries to state gold buying entity — Fidelity Printers and Refineries (FPR), have called on the state buyer to review the foreign currency component that they get for deliveries.

Reserve Bank of Zimbabwe (RBZ) Governor, Dr John Mangudya, reviewed downwards the foreign currency component due to small-scale miners from 70 percent to 55 percent when he presented the 2019 monetary policy statement.

The RTGS$ component is, however, now being paid at the interbank exchange rate as opposed to the 1:1 that prevailed before the liberalisation of the US$ to RTGS$ rate.

The review has, however, been followed by a decline in gold deliveries to the state buyer at a time Government is targeting to grow deliveries from a record 33,2 tonnes delivered last year to 40 tonnes this year.

Presenting a paper at a meeting with FPR where the gold buyer sought for producer input on how to grow deliveries, small-scale miners’ representative body — Zimbabwe Miners Federation (ZMF) secretary general Morgan Mugawu, said there is need for a review of the foreign currency retention threshold.

Mr Mugawu said while the miners are not seeking 100 percent foreign currency payment as they appreciate the need for Government to meet other pertinent needs which need foreign currency settlement, there is also need to retain the payment ratio that resulted in record deliveries.

“On foreign currency retention, our appeal is that Fidelity restores the 70:30 ratio, the reason being that the 55:45 threshold has had negative gold delivery effects,” said Mr Mugawu.

“What we are saying is that we are better off with Government retaining 30 percent and dissuade leakages than taking 45 percent but at the end of the day foster fertile ground for leakages that then harm the economy.

“We are not saying we want 100 percent for the producer because we are aware Government has other critical obligations to be met in foreign currency but reality is the fiscus is better off with 30 percent of 40 tonnes than 45 percent of 10 tonnes,” he said.
He also highlighted that with most local suppliers now demanding US$ payment for goods and services on the local market, the miners’ foreign currency costs have gone up over and above imported consumables.

Gold production and mining in general is one of the key pillars on which Government has hinged the success of Vision 2030 by which Zimbabwe should be an upper middle income earning economy with gold production figures set to hit 100 tonnes per year.